DaVita nears decision on space

Downtown Tacoma’s second-largest private employer remains in the hunt for new quarters even as the economy moves deep into recession.

“We’re still actively looking at a number of possibilities,” said Jim Hilger, vice president of kidney dialysis provider DaVita Inc. Changes in the economy have raised new proposals as existing companies shrink their footprints in office buildings throughout the region and as new building developers find tenants hard to sign.

Both Tacoma business leaders and commercial real estate professionals said they expect DaVita will make some decision soon, perhaps in as little as 30 days.

The company employs about 850 workers downtown in the former Schoenfeld Furniture Building at South 15th Street and Pacific Avenue. Those workers provide accounting services for the California-based company.

Nick Cassino of CB Richard Ellis Commercial Real Estate said his company, which DaVita has hired to evaluate the proposals from developers and building owners, said more offers have emerged in recent months. His company is evaluating those now.

Bruce Kendall, president of the Economic Development Board for Tacoma-Pierce County, said Tacoma leaders have created a package of benefits they hope will keep DaVita in town. Those include a sales tax exemption on new construction, a promise from the city to build parking for the company and infrastructure improvements such as new sewers.

Two of the proposals the company is considering for its new home are:

 • A new building to be constructed on the former site of Sauro’s Cleaners at South 14th Street in Tacoma.

 • Pacific Avenue and a move to a former microchip plant on Puyallup’s South Hill.

Oakland developer Mike Bartlett, owner of DaVita’s current building, said the advantage of the Sauro’s site is that it would mean some DaVita workers could remain in the Schoenfeld building and others who are now scattered around downtown in four other offices, could move to offices adjacent to the old furniture store.

DaVita’s lease on the Schoenfeld Building expires in April 2011. Bartlett hopes to re-sign the company for a lease extension on that building.

DaVita is working with Seattle’s Wright Runstad & Co. to develop plans for a new building on the cleaners’ site. The City of Tacoma bought that site from the heirs of the cleaners’ owner and is cleaning up pollution beneath the site this spring to make the plot ready for development.

Meanwhile, another Seattle developer, Benaroya Cos., is hoping to interest DaVita in the campus-like three-building high-tech complex on South Hill.

The company has already remodeled some of the offices there to show prospective tenants how the buildings could look if renovated.

DaVita says it will need about 200,000 square feet of space when its lease runs out on the Schoenfeld Building. Within 10 years, that space requirement will grow to about 250,000 square feet.

The Schoenfeld Building and an adjacent structure contain about 120,000 square feet of space, said Bartlett.

The tricky proposition in building an office that will accommodate DaVita’s present and future needs is how to finance the construction when the company won’t occupy some of that space for several years.

In a more robust economy, a developer could find shorter-term tenants for the expansion space, but with the economy in meltdown, finding tenants for that space could be difficult.

DaVita has managed to improve its earnings when most companies are seeing declines. The company reported profits of $374.2 million last year compared with $340.3 million in 2007.

John Gillie: 253-597-8663

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